A real estate commission is a fee paid to agents or brokers for their services in helping to buy, sell, or lease a property. Typically structured as a percentage of the final sale price, this commission compensates agents for marketing, negotiations, paperwork coordination and guiding clients through closing.
Commissions align incentives: agents only earn when a deal closes, motivating them to secure the best price and smoothest transaction. Sellers see the cost as part of marketing their home, while buyers benefit from agent expertise in finding properties, negotiating terms and managing inspections.
Most markets use a 5–6% total commission. On a $500,000 sale, a 6% rate equals $30,000. Rates vary by region, brokerage policies and service levels, but 5–6% remains the industry norm in the U.S.
The most common model multiplies the agreed percentage by the sale price. Example: 6% × $300,000 = $18,000.
Some agents offer flat fees (e.g., $5,000 for listing services) or hybrid plans combining a low base rate plus performance bonuses if the sale exceeds a target price.
Sale price $300,000 × 6% commission = $18,000 total. Split evenly, each agent (listing and buyer’s) earns $9,000.
By standard practice, the seller pays the full commission out of proceeds at closing. The listing agreement with their agent specifies the rate.
Buyers rarely write a separate check. Instead, the commission is factored into the home price—so buyers indirectly cover part of it through purchase price.
In competitive or slow markets, sellers and buyers may negotiate splits or reduce rates to close deals faster or lower closing costs.
A typical 6% commission splits 50/50: 3% to the listing agent’s brokerage and 3% to the buyer’s agent’s brokerage, then shared with individual agents.
Brokerages often take 20–50% of an agent’s gross commission. This supports branding, compliance, training and back-office operations.
Agents working on teams may pay a fixed desk fee or split commissions further with team leaders in exchange for lead generation, marketing and administrative support.
High-demand markets and luxury properties may command higher rates. Sellers with lower-priced homes or limited agent services can often negotiate discounts.
Sliding-scale agreements pay a higher percentage if the sale price exceeds a set target, rewarding agents for outperforming price expectations.
Discount brokers offer lower rates (often 3–4.5%) for basic services; full-service agents handle staging, open houses and in-depth marketing at 5–6%.
Flat-fee services list your home on the MLS for a set price, then you handle showings and negotiations yourself.
FSBO tools charge minimal fees or subscriptions, but sellers assume marketing, buyer vetting and contract coordination.
iBuyers make instant cash offers with fees ranging from 6–10%, trading convenience for potentially lower net proceeds.
Commission checks are disbursed from escrow at closing. Funds flow from the seller’s net proceeds to brokerages, then to agents.
If no closing occurs, agents generally earn no commission. Some agreements include a retainer or cancellation fee to cover pre-closing costs.
For sellers, commissions are a closing cost and reduce taxable gain on the sale. They are not refundable once paid.
Includes listing syndication, print/digital ads, drone shots and staging consultations.
Coordinating showings, hosting events, screening potential buyers and qualifying financing.
Drafting offers, counteroffers, contingency management, inspections, appraisals and final paperwork until keys transfer.
The Smiths list their suburban home at $400,000 with a 6% total commission (3% listing, 3% buyer’s).
$400,000 × 6% = $24,000 total fee.
Each side’s brokerage receives $12,000; individual agents get their share based on office splits.
The Smiths built a 6% commission into their sale price expectations, interviewed three agents, and chose an agent offering a 5.5% sliding scale—netting an extra $2,000 at close for minimal additional effort.
Most agents charge 5–6% of the sale price, split between listing and buyer’s sides.
Yes, by default the seller pays the full commission, though buyers indirectly contribute via the sale price.
Absolutely. Rates are negotiable based on home value, market conditions and service expectations.
Typically a 50/50 split between listing and buyer’s brokerages, with each then splitting with their agent.
They save fees but require more DIY effort. Evaluate your comfort with marketing and negotiations before choosing.
Paid at closing from escrow proceeds. No fee is due until the sale is finalized.
No closing, no commission—unless your contract includes a cancellation fee or retainer.
They’re not directly deductible, but they reduce your taxable gain by increasing your cost basis.
Real estate commissions reward agents for end-to-end services, usually at 5–6% of sale price, split between listing and buyer’s representatives.
Sellers should interview multiple agents and compare commission structures. Buyers should confirm their agent’s compensation and services. Agents must tailor fee proposals to market and client needs.
